UNIT – 3
Performance Management
INDIVIDUAL PERFORMANCE MANAGEMENT
• Individual Performance means the performance objectives specifically
attributable to each Participant reflective of his/her functional area
and responsibilities, taking into consideration top Executive’s
evaluation of performance in that regard.
• A performance management system tracks the performance of
employees in a manner that is consistent and measurable. The system
relies on a combination of technologies and methodologies to ensure
people across the organization are aligned with – and contributing to
– the strategic objectives of the business.
The factors that affect individual job performance
• income
• rewards and incentives
• workplace environment
• work-family factors
• personality.
Factors influence individual poor performance in
organisation
• Poor Cross-Team Communication.
• No clarity on who's doing what by when.
• No Goals Defined and No Tracking Against the Goal Set.
• Workload Imbalance.
• Role-Ability Fit.
• Lack of Transparency.
• Uninspiring Leadership.
• Culture unfit.
Factors influence individual poor performance
in organisation
• individual work performance (IWP) can be divided into four
dimensions:
• task performance
• contextual performance
• adaptive performance
• counter productive work behavior.
Performance Alignment
• Expected performance occurs when a person’s behavior or actions
produce the intended results or outcomes. “Performance Alignment”
exists when actual performance matches expected performance. As
we all know, actual performance often deviates from expected
performance – in good ways as well as bad. Occasionally, we surprise
ourselves with the quality of the performance we turn in (good or
bad). The same is true for the cost of achieving it (under or over). One
of your ongoing aims – whether as a manager, a consultant or in
relation to your own performance – has to be that of aligning actual
performance with expected performance.
Six factors affecting performance alignment
Group Performance
• Group performance is the process and outcome of members' joint
efforts to achieve a collective goal. That goal could be nearly
anything—to reach a decision, to solve a problem, to generate an
idea, to negotiate a contract, to build a house.
• Psychological safety.
• Dependability.
• Structure and clarity.
• Meaning
• Impact.
• Across multiple sectors, four key variables were identified as
important for teamwork, team function, team performance and team
effectiveness; (i) leadership style (ii) supportive team behaviour (iii)
communication, and (iv) performance feedback.
Performance linked Career
Planning
• Overview
• Personal Developmental Plans
• Direct Supervisor’s Role
• 360-degree Feedback Systems
Stakeholders in the Development
Process
Employees
• Help plan their own development
• Improve their own performance
Managers
• Help guide the process of development
• Support success of process
Personal Developmental Plans
• Specify actions necessary to improve performance
• Highlight employee’s
Strengths
Areas in need of development
Personal Developmental Plans: Overview
• Developmental Plan Objectives
• Content of Developmental Plan
• Developmental Activities
Developmental Plan Objectives
Overall Developmental Plan Objectives
• Encourage…Continuous learning
• Performance improvement
• Personal growth
Specific Developmental Plan Objectives
• Improve performance in current job
• Sustain performance in current job
• Prepare employee for advancement
• Enrich employee’s work experience
Content of Developmental Plan
• Developmental objectives
New skills or knowledge
Timeline
• How the new skills or knowledge will be acquired
Resources
Strategies
• Standards and measures used to assess achievement of objectives
• Based on needs of organization and employee
• Chosen by employee and direct supervisor
• Taking into account
Employee’s learning preferences
Developmental objective in question
Organization’s available resources
Developmental Activities “On the Job”
• On-the-job training
• Mentoring
• Job rotation
• Temporary assignments
• Courses
• Self-guided reading
• Getting a degree
• Attending a conference
• Membership or leadership role
In professional or trade organizations
Direct Supervisor’s Role
• Explain what is necessary
• Refer employee to appropriate developmental activities
• Review and make suggestions regarding developmental
objectives
• Check on employee’s progress
• Provide motivational reinforcement
Forward Interview
Goals :
• Understand the types of behaviors and skills that individuals
have that allow them to perform well
• Think about ways to use these behaviors and skills in other
contexts to make further improvements in the future.
Steps of a Feedforward Interview
• Elicit a success story
• Uncover the underlying success factors
• Extrapolate the past into the future
360-Degree Feedback Systems
• Tools to help employees
• Improve performance by using performance information gathered from many
sources
Superiors
Peers
Customers
Subordinates
The employee
• Anonymous feedback
• Most useful when used
For DEVELOPMENT
NOT for administrative purposes
• Internet used for collecting data
Is the 360-Degree Feedback System
Always Beneficial
• Most effective for individuals who:
• Are high in self-efficacy
• Perceive a need to change
• Believe change is feasible
• Set goals and take action
• Less effective for individuals who: Are low in self-efficacy
Overview of 360-Degree Feedback Systems
• Advantages of 360-Degree Feedback Systems
• Risks of 360-Degree Feedback Systems
• Characteristics of a Good 360-Degree Feedback System
Advantages of 360-Degree Feedback
Systems
• Decreased possibility of biases
• Increased awareness of expectations
• Increased commitment to improve
• Improved self-perception of performance
• Improved performance
• Reduction of “undiscussables”
• Increased employee control of their own careers.
Risks of 360-Degree Feedback Systems
Unconstructive negative feedback hurts
Are individuals comfortable with the system? (User acceptance is crucial)If few
raters, anonymity is compromised
Raters may become overloaded.
Stock values may drop
Characteristics of a Good 360-Degree
Feedback System
• Anonymity
• Observation of employee performance
• Avoidance of survey fatigue
• Raters are trained
• Used for developmental purposes only (at least initially)
• Emphasis on behaviors
• Raters go beyond ratings
• Feedback interpretation
• Follow-up
Performance Linked Reward
System
Performance linked remuneration system
• Performance linked compensation is a form of payment from an employer to an employee, which is
directly related to the performance output of an employee and which may be specified in an
employment contract.
• A performance management and reward system is defined as a set of tools, processes, and policies
that allow organizations to monitor and improve employee performance while recognizing and
rewarding employees fairly for their contributions. Today, organizations are demonstrating an
elevated level of commitment toward the development of compensation practices that are
consistent with other HR processes. Your reward systems must ideally be aligned with the
organization's objectives for drawing in, retaining, and inspiring workforce members.
• Effective reward practices will help in recruiting result-oriented workers who can flourish and
prosper in performance-based environments. Therefore, the performance improvement framework
must be linked to an effective rewards system. It must build a culture of remuneration and benefits
that's based on performance, offers abundant learning opportunities, and maintains a healthy work
environment. That is what a performance management and reward system is all about.
Benefits of a Performance Management and
Reward System
1. Increased employee motivation and engagement
A performance management and rewards system links employee rewards with how well they do their work. Moreover, managers have the
opportunity to invest substantial time towards meaningful activities – like checking in on employees and if they are pursuing the right targets and
goals. They enable employees to maximize their abilities and duties. In turn, this increases the likelihood of job satisfaction and fulfillment.
2. Improved productivity and performance
These systems enhance the overall efficacy of the organization. Employees who are performing well will deliver outstanding work and be more
inclined to take on new things and keep moving forward. When a few employees are rewarded, it may also inspire their co-workers to be more
productive and improve their performance.
3. Enhanced employee retention and loyalty
Because human capital is such a valuable asset, it is crucial to discover methods to retain your employees. Employee autonomy is augmented
when they are given a chance to relentlessly pursue targets. They can then point out areas for improvement, which, ultimately, gives them a
reason to stay on. And since performance leads to a coveted reward, it urges them to stay with the organization and keep performing.
4. Alignment of individual and organizational goals
The system encourages individuals while bringing together their personal and organizational objectives. This methodology is continuous and
ongoing, in comparison to the conventional approach, which is primarily recognized for its annual assessment of performance.
Key Components of an Effective Performance
Management and Reward System
1. Clear and measurable performance goals and expectations : Goal-setting is
imperative for performance management and incentives because it gives employees
an established course of action to follow. Workers are better equipped to execute
tasks at a high level when they comprehend their job duties, goals, and targets.
2. Regular and constructive feedback and coaching: By interacting with employees
frequently, management can deliver timely feedback and direction. This helps
employees stay on course and rectify their errors.
3. Fair and transparent performance evaluation process: In a majority of Indian
organizations, appraisals happen twice a year, during mid-year evaluations and
annual reviews convened at the end of the fiscal year. The employee presents self-
completed evaluations and quantifies their achievements over time.
4. Tailored rewards and recognition programs: Rewards and recognition is an aspect of
performance management that is frequently undervalued. When employees are
acknowledged for their contributions, they feel respected and valued, which boosts
their enthusiasm and dedication. Leaders must make recognition a priority when
individuals achieve targets, demonstrate exceptional commitment, or exhibit valued
behaviors.
Advantages and Disadvantages of performance
linked compensation
Advantages of performance linked compensation
• It motivates.
• It delivers the right message.
• It is fair to reward people according to their performance.
• It provides a tangible means of rewarding and recognising achievements.
Disadvantages of performance linked compensation
• It is not a guaranteed motivator.
• Pay is not a motivator.
• It demotivates staff who do not benefit.
• It ruptures relationships and team work.
• It represents a diversion from managing staff performance properly.
• It discourages risk-taking.
• It undermines the intrinsic interest in the work.
Types of variable pay plan
• Individual
Commission: it is percentage of the output that an employee generates.
Piecework: employees are paid one piece rate for units produced up to a standard output and a
higher piece rate wage for units produced over the standards.
Bonuses: A one time payment that does not become part of the employee’s base pay.
Awards: cash or merchandise used as an incentive reward.
• Group
Profit Sharing: it is in addition to an employee’s regular salary or wages. In this company
shares a portion of its profits with its employees.
Team Awards: this recognises employees who work well with others to achieve a common goal or
objectives.
• Organisation
Profit sharing: distribute a portion of the profits in the organisation to employees.
Employee stock options: it give employees the right to purchase a fixed number of shares of
company stock at specified price for a limited period of time.
Performance linked career
planning and promotion policy
Performance Linked Career Planning
• Through this process, employees work towards goals that support the
needs of the business and their professional development. The
purpose is to build relationships and facilitate conversations between
employees and managers throughout the year with regard to
performance goals, career goals, and career planning.
• Planned succession of jobs worked out by a firm to develop its
employees. Organisational career planning must closely parallel
individual career planning if a firm is to retain its best and brightest
employees.
Benefits of combining performance measurement
and career planning
• Combining performance measurement and career planning can bring many
benefits to both your staff and your organization, such as
• increased alignment between individual and organizational goals,
• enhanced clarity and transparency about expectations,
• improved motivation and engagement among staff,
• expanded opportunities for learning and development,
• reduced turnover, and increased retention of talent.
• Additionally, this combination can help create a culture of continuous
learning and improvement in your organization, where staff are encouraged
to pursue their professional growth and reach their potential.
Objectives of linking performance with
Promotion Policy
• To integrate the growth opportunities of the executives with the
fulfilment of the company’s objectives.
• To identify, train and develop competent personnel with growth
potential and to provide a policy environment for high levels of
performance.
• To provide a system of equality in opportunity, equity in assessment
and uniformity in implementation among all the units, business
groups, directorates and officers of the company in the matter of
promotion.
• To seek and provide a continuous team of work sustained high levels
of competence in the company.
